Oreck Corp. v. Thomson Consumer Electronics, Inc.

• Decision Date: 16 June 1992
• Docket Number: No. IP 89-612-C.,IP 89-612-C.
• Citation: 796 F. Supp. 1152
• Parties: ORECK CORPORATION, Plaintiff, v. THOMSON CONSUMER ELECTRONICS, INC., Defendant.
• Court: U.S. District Court — Southern District of Indiana

796 F. Supp. 1152

ORECK CORPORATION, Plaintiff, v. THOMSON CONSUMER ELECTRONICS, INC., Defendant.

No. IP 89-612-C.

United States District Court, S.D. Indiana, Indianapolis Division.

June 16, 1992.

Paul T. Meiklejohn, Seed & Berry, Seattle, Wash. and Richard L. Darst, Mantel, Cohen, Garelick, Reiswerg & Fishman, Indianapolis, Ind., for plaintiff.

James M. Durlacher, Woodard, Emhardt, Naughton, Moriarty & McNett, Indianapolis, Ind., for defendant.

PARTIAL SUMMARY JUDGMENT

BARKER, District Judge.

I. Background

In 1968, David Oreck, an authorized RCA dealer, had the idea to market RCA products using the words "XL" and "X-TENDED LIFE." However, concerned that the Federal Trade Commission might consider an "XL" mark misleading, RCA instructed Oreck not to use "XL" in connection with any RCA product.

Oreck complied with RCA's request, but was undaunted by RCA's rejection of his "XL" campaign, and, in 1969, started using "XL" and "X-TENDED LIFE" in association with other, non-RCA products that he sold from his dealership. In 1970, Oreck registered the "XL" trademark (for vacuum cleaners),¹ but it was only a matter of time (one year) before RCA technology caught up with Oreck's advertising campaign.

In 1971, RCA began installing a 100% solid state chassis in its televisions, an improvement RCA believed "extended" the life of its televisions. No longer concerned with potential charges of deceptive advertising, RCA spoke to Oreck over the phone about using the "XL" designation; RCA knew Oreck had been using the "XL" mark on other, non-RCA products. After discussing the "XL" mark with Oreck, RCA sent Oreck the following letter:

28 April 1971

Dear Dave:

This will confirm our telephone discussion of today concerning RCA's proposed use of XL as part of a new advertising campaign.

You agreed that you and your affiliated companies have no objection to RCA's use of XL or a similar term in connection with the advertising and sale of television sets and you waive whatever right you may have to the term XL with respect to the use of that term in connection with RCA television products.

I would appreciate your returning the enclosed copy of this letter after you have signed it.

Very truly yours,

signature of RCA official

Oreck signed the tendered copy of the letter and returned it to RCA. RCA began using an "XL-100" mark on its televisions the following year, in 1972.

In 1975, RCA filed an Application for Trademark Registration of the "XL-100" mark with the Patent and Trademark Office. As part of that application, the Executive Vice President of RCA, Robert L. Werner, submitted an affidavit, which stated in part:

Werner believes said corporation to be the owner of the mark sought to be registered; to the best of his knowledge and belief no other person, firm, corporation, or association has the right to use said mark in commerce, either in the identical form or in such near or resemblance thereto as to be likely, when applied to the goods of such other person, to cause confusion, or to cause mistake or to deceive; ...

Thomson's Motion for Summary Judgment on the Grounds of Laches, Estoppel, Acquiescence and Statute of Limitations, Exhibit 5.

Unaware of, or perhaps unconcerned by Oreck's prior registration of "XL," the Patent and Trademark Office approved and published for opposition the "XL-100" trademark on December 9, 1975. Oreck's attorney, Nichol Sandoe, who Oreck "charged with the responsibility of protecting Oreck Corporation's trademarks," (see Oreck's Deposition of September 11, 1990, p. 156),² learned of the "XL-100" registration, and on January 7, 1976 filed a request for an extension of time to oppose registration of the "XL-100" trademark. However, Sandoe took no further action to oppose the "XL-100" registration nor did he tell Oreck that RCA had registered that trademark, and the "XL-100" trademark was registered without opposition on April 13, 1976. The "XL-100" registration remained uncontested for five years, and on April 13, 1981, the "XL-100" trademark became "incontestable." See 15 U.S.C. § 1056.

RCA enjoyed success with the "XL-100" campaign, and, in early 1977, RCA started using an "XtendedLife" mark on its televisions. Later that year, RCA filed an Application for the Registration of the "XtendedLife" mark with the Patent and Trademark Office.

Oreck learned about RCA's attempt to register the "XtendedLife" mark in 1977, and in the process, also discovered (although the record does not reveal exactly how) that RCA had already registered the "XL-100" mark. Angered by what he had discovered, Oreck instructed his attorney to remind RCA of his position that he, not RCA, owned "XL" and "X-TENDED LIFE." RCA apparently did not agree with Oreck's position, and the two began negotiating/debating the ownership and use of the "X-TENDED LIFE" mark.³ Eventually, Oreck offered to grant RCA a license to use the "X-TENDED LIFE" mark if RCA would withdraw its "Xtended-Life" registration application. Either RCA accepted that offer (according to Oreck's Deposition of April 18, 1989, see infra note 3, and Jack K. Sauter's Affidavit of March 9th, 1989, ¶ 4) or RCA refused Oreck's license offer, withdrew its trademark application for other reasons, and Oreck and RCA continued these negotiations/debates regarding the use and/or ownership of "XL-100" and/or "X-TENDED LIFE" until 1982⁴ or 1987. (See Oreck's Declaration of April 2, 1991, ¶¶ 4-5; Plaintiff's Opposition to Defendant's Motion for Partial Summary Judgment, p. 12: "In this case, Oreck first complained about RCA's registration of the mark in 1977. Thereafter attempts to settle continued until about 1987."). In any event, on September 16, 1982, RCA sent Oreck's attorney a letter regarding its final position regarding the "XL Marks." That letter, in relevant part, stated:

Re: XL Marks

* * * * * *

As previously stated, RCA does not wish to adversely affect Mr. Oreck's trademark rights in his registered and common law trademarks.

RCA does, however, maintain its claims to its own rights to the "XL-100" mark for television sets based on its longstanding usage of the mark for such goods, Mr. Oreck's acknowledgement of RCA's letter to him, dated April 28, 1971, by which he waived whatever right he may have to the term "XL" with respect to the use of that term in connection with RCA television products, as well as USP-TO Registration No. 1,037,820.

Hopgood's Deposition of April 24, 1991, Exhibit 18.

In 1988, Thomson Consumer Electronics, RCA's successor corporation,⁵ terminated Oreck's authority to sell RCA products and filed an action (in another court) against Oreck for non-payment of a debt. In response, on March 15, 1989, the Oreck Corporation filed this action against Thomson for trademark infringement, claiming (1) false designation of origin (of "XL-100" and "X-TENDED LIFE") under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) trademark infringement (of "XL-100" and "X-TENDED LIFE") under § 32 of the Lanham Act, 15 U.S.C. § 1114; (3) fraudulent obtainment of a trademark registration (of "XL-100") under § 37 of the Lanham Act, 15 U.S.C. § 1119; (4) and (5) two violations of the Connecticut Unfair Trade Practice Act (regarding "XL-100" and "X-TENDED LIFE"), and (6) unjust enrichment (regarding "XL-100" and "X-TENDED LIFE").⁶

Thomson filed its answer with counter-claims (alleging breach of contract and seeking cancellation of Oreck's "XL" trademark) and a motion to dismiss, claiming that Oreck's third claim, the claim upon which Thomson argues all infringement claims against the "XL-100" mark rest, is barred because it fails to state a claim of fraud. Thomson also filed a motion for summary judgement, claiming that even if Oreck has stated a claim of fraud, since Oreck could have filed suit as early as 1976 (when Sandoe requested an extension of time to contest the "XL-100" registration), Oreck's complaint is barred by a statute of limitations, laches, acquiescence, and estoppel. Thomson also filed a second motion for summary judgment based on the April 28, 1971 "waiver agreement." These motions for dismissal and summary judgment are the subject of this entry.

II. Discussion

A. The April 28, 1971 Letter: Is it the Entire, Integrated Contract?

Addressing first Thomson's second motion for summary judgment, the Court is asked by Thomson to find as a matter of law that Oreck waived his interest in the trademark(s) at issue. Oreck claims, in response, that the April 28, 1971 letter represents only a part of an oral/written license. Oreck claims that prior (and subsequent) to signing the April 28, 1971 letter, Oreck and RCA verbally agreed that RCA could use the "XL" mark only for as long as RCA authorized Oreck as a distributor of RCA products. Oreck asserts in his declaration:

In 1971, when an RCA official asked me to sign the letter.... I was told, and understood at that time this letter merely reduced to writing the agreement which RCA and I had already orally consummated. That agreement, as I understood it then, and as I understand it now, was that RCA was an exclusive licensee under my mark "XL" and would continue as an exclusive licensee as long as McDonald Sales corporation continued as a distributor of "XL" television products.

Oreck's Declaration (not dated), ¶ 6.⁷

In support of his position, Oreck also filed with this Court a sworn declaration of an RCA employee, Jack K. Sauter, in which Sauter affirms:

4. I personally negotiated the agreement between David Oreck and RCA for use of the "X-TENDED LIFE" mark and had discussions with RCA personnel and David Oreck concerning the "XL" mark.

* * * * * *

19. My understanding of the agreement between Oreck and RCA as to the "XL" mark is that Oreck would retain ownership of the trademark, but allow RCA to use it.

20. I knew that Oreck permitted RCA to use the "XL" mark without paying any money. It was assumed that if Oreck ceased to be an RCA distributor, whether voluntarily or involuntarily, RCA

...